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| Montana Administrative Register Notice 42-2-876 | No. 18 09/20/2012 | |
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BEFORE THE DEPARTMENT OF REVENUE OF THE STATE OF MONTANA
TO: All Concerned Persons 1. On May 10, 2012, the department published MAR Notice Number 42-2-876, regarding the proposed adoption and amendment of the above-stated rules at page 961 of the 2012 Montana Administrative Register (MAR), Issue Number 9. 2. A public hearing was held on June 4, 2012, to consider the proposed adoption and amendment. Tony Herbert of the Montana Brewers Association, Mark Staples of the Montana Tavern Association (MTA), Neil Peterson of the Gaming Industry Association of Montana, and Ronda Wiggers of the Montana Coin Machine Operators, all appeared and testified at the hearing. The department also received written comments from three of the testifying attendees. Additionally, the department received written comments from Jorge Quintana, counsel for the Montana Secretary of State (SOS), Jaret Coles, counsel for the Montana Legislative Services Division, and a group of liquor licensees including Stuart Ellison of Wooly Bugger, Inc., Michael Kenneally of Town Pump, Inc., Mitchell Carlton of Jack Rabbit Reds Casino, David Hanson of Teasers Gentleman's Club, Dirk N. Cooper of Diamond Jim's Casinos, William J. Nooney of Diamond Jim's Casinos, Larry Davidson of Crystal Lounge, Chelcee Rogers of B&H Casino, Joe McKenney of Cart Wheel Casino and Liquor Store, Maureen Blatter of Loose Caboose Casino, Bryan Sandrock of 4J's Casino, Deryl Sandrock of Drae's Station Casino, Chris Sandrock of Sunset Casino-702 Club, and a representative of Little Nevada Casino. For the purposes of the following summary, the group of liquor licensees will be referred to as the Licensees when referencing their common comments. The oral and written comments received at or subsequent to the hearing are summarized as follows, along with the responses of the department:
COMMENT NO.1: Mr. Peterson, Mr. Kenneally, and the Licensees all commented that the language in the preamble stating a licensee may not minimize the sale of alcoholic beverages to promote other business interests or activities over the sale of alcohol is not supported in code. Mr. Peterson stated that existing statute and rule would support an exact opposite conclusion. Mr. Kenneally asked if the department thus requires on-premises alcoholic beverage licensees to maximize the sale of alcoholic beverages and consumption compared to any other product or service promotion that the licensee is allowed by law to offer, how would this work in the real world? Mr. Peterson further commented that while the Montana Alcoholic Beverage Code (MABC) allows the department to develop and maintain a licensing system for the manufacture, distribution, and sale of alcoholic beverages in Montana, the department has no statutory or regulatory mandate to tell liquor license owners how to operate their businesses. The department should only be concerned that a licensee is promoting the legal and responsible consumption of alcoholic beverages. Mr. Kenneally commented that on-premises licensees throughout Montana offer and promote a variety of other business interests, products, services, and activities that clearly take promotional priority or emphasis over the promotion of the sale of on-premises consumption of alcohol. Many compliant licensees, such as bowling alleys, hotels, restaurants, pool halls, golf courses, ski areas, baseball parks, etc., could now be considered to be impermissibly minimizing the sale of alcoholic beverages. In addition to the clear impracticality of this proposal it would seem to contradict the much publicized broad goal of changing Montana's alcohol culture. On-premises licensees that offer a variety of products and services in addition to the sale and consumption of alcoholic beverages are much more likely to promote alcohol temperance, and thus aid in the responsible sale and service of alcoholic beverages. Mr. Peterson commented that while the department cites the concept of public convenience and necessity as one basis for their conclusion; this only comes into play during the licensing process and only if a protest is received from the public. As per 16-4-203, MCA, if there is no protest to the issuance of a license then public convenience and necessity is met and no further determination is allowed by the department. He stated that the department should reject their position and modify any of the new rules or amendments to existing rules they have made using this erroneous finding. Mr. Peterson made reference to the language in ARM 42.13.108, which defines how the department will determine whether or not a licensee's business to sell alcoholic beverages operates as a going concern, and commented that all that is required under this rule is that the licensee must be open twenty hours a week, maintain ten cases of product for sale, and sell $50 of alcoholic beverages a week. He further commented that the standard for a going concern does not seem to support the department's position. Mr. Peterson commented that singling out gambling in the example is troubling. Current rule, ARM 42.12.122, states there are several businesses that are directly tied to the sale of alcoholic beverages. Surely a bowling alley primarily promotes bowling, a restaurant primarily promotes the sale of food, and a hotel primarily promotes lodging, and it is nonsensical that the department's position could be or would be applied to these types of businesses. He also commented that gambling was further tied to the sale of alcoholic beverages by the legislature in 23-5-119, MCA, which requires that a holder of a gambling license must also possess an on-premises license to sell alcoholic beverages. RESPONSE NO. 1: The department appreciates these comments. After prohibition, the state of Montana determined to permit the sale and consumption of alcohol, subject to restrictions, including that alcohol sales be made only by persons licensed by the state. In 1947, the Legislature further limited on-premises licenses, with a quota based on population within each defined quota area (16-4-105, 16-4-201, and 16-4-420, MCA). The licensing system provides a network of licensed businesses to provide alcohol to the public in a responsible manner. It is illogical to license an activity and to not have the activity occur. If licensees do not provide for alcohol to be consumed on their premises it defeats the purpose of the network, and is inconsistent with other statutory provisions, such as that requiring that a license not actually in use be lapsed and made available to another applicant (16-3-310, MCA). The numbers of licenses are limited based on the quota and the licensed activity needs to be in existence and needs to be conducted in a safe and responsible manner. The department does not require the licensees to maximize the sale of alcoholic beverages or not promote other activities, but in fact requires the licensee to make available the activity for which they are licensed, without requiring the public to engage in another activity. In regards to Mr. Peterson's comment about public convenience and necessity, the MABC does require that on-premises consumption alcoholic beverage licensees materially promote the public's ability to engage in the licensed activity, i.e., the on-premises consumption of alcoholic beverages (16-4-203, MCA). The fact that this is determined as a threshold requirement for licensure illustrates its importance in the MABC. Furthermore, the primacy of the alcoholic beverage sales aspect of the licensed business is further indicated by the law, which makes an alcoholic beverages license a prerequisite for obtaining a license to engage in another activity commonly associated with bars, such as gambling. (See In re Transfer of Ownership & Location of Mont. All-Alcoholic Bevs. Lic. No. 02-401-1287-001, 2007 MT 192, ¶ 4, 338 Mont. 363, 168 P.3d 68). This is not inconsistent with a culture of responsible alcohol consumption or, the promotion of temperance, as it is described in 16-1-101(3), MCA, as on-premises consumption in a licensed establishment occurs in the presence of licensees, or their employees, who are bound by law to prevent over-service. The fact that licenses are limited by quota and must lapse if not used (in order to enable another person to be licensed up to the quota) provides strong support for the proposition that the MABC is intended to require all quota licenses to be used for the licensed activity of on-premises alcohol sales. On-premises consumption alcoholic beverage licenses may certainly be used in conjunction with other lawful businesses. However, if a business chooses to obtain an alcoholic beverage license it must uphold its obligation to permit the public to responsibly engage in on-premises alcohol consumption. The business cannot design or operate its premises in such a way that on-premises alcohol consumption is difficult for the public to engage in without also engaging in some other activity. To do so thwarts the intent of the quota system.
COMMENT NO. 2: Mr. Staples commented that it's ironic in this rulemaking that the department seeks to clarify, define, and emphasize its longstanding authority over alcohol and alcohol transactions in Montana, while at the same time, there are premises in Helena that openly defy that authority by operating, and even advertising, unlicensed bottle clubs. He stated that legitimate, licensed, premises are investigated, examined, protested, inspected, audited, stung, taxed, zoned, and assessed fees in exchange for the privilege of serving alcohol in a public establishment. They must train their servers, conform their premises, check identification, not over-serve, be law-abiding, pay their taxes, and generally be in strict compliance with a vast array of governmental controls over their alcohol service. Mr. Staples asked, relative to the bottle clubs, what their requirements are. He commented that they operate with no restrictions, scrutiny, or consequences and are a gaping tear in the fabric of the State of Montana's alcohol control system. He further commented that in Montana, a control state, if you want to escape all responsibility, regulation, investigation, scrutiny, sanctions, and consequences related to transactions involving alcohol, just move to Helena, open a bottle club, transact with patrons by requiring food purchase, or by charging a corkage fee for opening the alcohol and providing the glasses. And in our state's most tightly and comprehensively regulated business you can operate totally unfettered by even as much as a guideline. Mr. Staples stated that the MTA has consistently been supportive of the department's authority and administration of alcohol matters. He further stated that with all sincere respect, they ask how in fairness the department can propose to tighten down even tighter via these rule proposals on law abiding, multi-rule compliant, tax-paying alcohol licensees, while in the same city where these proposals were drafted a practice flourishes that openly contradicts the very control principle upon which these proposals are premised. Mr. Staples commented that while the department may consider this a matter for local law enforcement, 16-6-306, MCA, clearly prohibits bottle clubs. He further commented that in every other jurisdiction in Montana local authorities have cited 16-6-306, MCA, in shutting down bottle clubs when they have appeared. That Helena and Lewis and Clark County authorities do not enforce that statute should be irrelevant to the department, just as in some sting cases, whether a local prosecutor makes a deal with the noncompliant employee makes no difference to the department in pursuing their own action against the cited establishment. Mr. Staples stated that the department may ask if they are not licensed what sanctions can be imposed. If the department determines that it is constrained by jurisdictional limits that extend only to licensees, it is in no way similarly limited in its reach, relationships with, and influence over numerous public advocacy groups who consistently rail against what they deem to be Montana's alcohol culture. Before the department finalizes any new or clarified strictures on legitimate licensees it should use its considerable influence to urge the aforementioned groups to in turn use their influence to bring an end to the bottle club culture in Helena, which openly mocks the control invested in the department. RESPONSE NO. 2: The department appreciates Mr. Staples' comments. He is correct; Montana law does prohibit bottle clubs. Like Mr. Staples, the department has serious concerns about any business in the state allowing the consumption of alcohol on its premises without being legally licensed to do so. The department does use, to its best ability, its powers of persuasion to encourage abiding by the law. While Mr. Staples highlights the existence of the bottle clubs in Helena and Lewis and Clark County, the problem exists in other jurisdictions as well. The department reaffirms that bottle clubs are unlawful under 16-6-306, MCA, and always encourages proper authorities to enforce the law. As Mr. Staples pointed out, the department is without an enforcement mechanism against unlicensed persons or businesses. Through this rulemaking process, the problem has again come to light and the department agrees that there exists a need for lawmakers to take note and deal with it in an effective way. The department will report to the Revenue and Transportation Interim Committee that in the course of this rulemaking the issue of unlicensed bottle clubs arose again, that the issue is of interest to the public, and that it is a matter that can only be dealt with by legislation. COMMENT NO. 3: Ms. Wiggers questioned where the authority to write the rules comes from. She further commented that there hasn't been a court decision, she doesn't don't know of a petition for rulemaking, and with the exception of two minor areas regarding the growlers and the liturgical wine, there hasn't been a change in the law that would require the department to go back into rulemaking. Ms. Wiggers stated that her understanding has always been that there needs to be a change or something to initiate rulemaking.
RESPONSE NO. 3: The department appreciates Ms. Wiggers' interest in the rulemaking process, and her comments. The department is authorized by law, 16-1-303, MCA, to make rules implementing and supporting the MABC, and is unaware of any legal requirement that such rulemaking must be preceded by a court ruling or statutory change. In fact, changes in practice and operation by licensees have occurred, justifying new rules.
COMMENT NO. 4: Mr. Herbert, Mr. Peterson, Ms. Wiggers, Mr. Kenneally, and the Licensees all commented on New Rule I (42.12.107). While the comments included praise for the department's efforts to provide educational materials; they further described the rule as far reaching and bad public policy that could lead to new requirements of license holders. The comments cited the department's lack of legislative or rulemaking authority to extend prohibitions on activities into educational materials, and noted that a state agency is prohibited from engrafting additional requirements on the statute which were not envisioned by the Legislature (Bell v. Dept. of Licensing, 182 Mont. 21 594 P.2d 331 (1979)). The comments included requests that New Rule I (42.12.107) be withdrawn.
RESPONSE NO. 4: The department appreciates the comments from Mr. Herbert, Mr. Peterson, Ms. Wiggers, Mr. Kenneally, and the Licensees. The proposed rules provide licensees with educational material as resources relative to what is allowed, or disallowed, by law and rules. The law guides the licensees and the rule provides advice on the law. Failure to heed the advice in the rule will not constitute a separate violation of the law or other rules. The educational materials are intended to be a helpful summary to licensees of what might otherwise be complex provisions of laws and rules. Further, the rule prompts communication between licensees and the department where there may be confusion as to whether the law permits certain activities a licensee desires to undertake. Better information and communication serve both the public interest and licensee interests. Accordingly, the department declines to withdraw the rule. The department is amending the rule to include language to make it clear that the rule is advisory only and does not create any requirements beyond those contained in law or other rules supporting the law. COMMENT NO. 5: Mr. Peterson commented, with regard to New Rule II (42.12.134), that the department states in the notice it is its goal to make the rules clearly understandable and thoroughly complete. In order to accomplish this goal, he suggests the department add language in (1)(a) that includes other businesses directly related to the sale of alcoholic beverages, such as a hotel, bowling alley, and gambling casino, as is found in existing rules. To include a restaurant as the only example provides incomplete advice to a licensee. RESPONSE NO. 5: The department agrees with Mr. Peterson's comments on New Rule II (42.12.134). Although these other types of business are already included in ARM 42.12.122(3)(a), which the new rule references; the department's goal is indeed to make the rules clearly understandable and thoroughly complete. Therefore, the department is amending New Rule II (42.12.134) to strike the proposed language in (a). Because (1) directly refers to the provisions in ARM 42.12.122, which already includes other businesses directly related to the sale of alcoholic beverages, such as a bowling alley, hotel, or gambling casino for all on-premises consumption licenses, it was determined that the language in (a) could be omitted altogether, to avoid any potential confusion. COMMENT NO. 6: Mr. Peterson commented, with regard to New Rule II (42.12.134), that it introduces a new requirement that an all-beverages licensee must sell beer, wine, and distilled spirits by the drink. He further commented that while the statute says the business has a license to sell a type of product it does not mandate that the business must sell all of the product types they are licensed to sell. The department is introducing a new concept not ever envisioned in statute and it would be contrary to the holding of Bell, as mentioned in the comments on New Rule I (42.12.107). Mr. Peterson stated that the department should not be involved in determining how a licensee operates its business other than to ensure the responsible sales and service of alcoholic beverages. The Licensees also commented that they are opposed to any new rules or amendments to existing rules being made that are not supported by either new legislation or a court ruling which would mandate a change, and that they are opposed to New Rule II (42.12.134). RESPONSE NO. 6: The department appreciates the comments from Mr. Peterson and understands his concerns with regard to New Rule II (42.12.134). Current provisions, ARM 42.12.122(2)(b)(ii), state the licensed premises must have a bar preparation area and sufficient seating to encourage patrons to remain on the premises and consume the alcoholic beverages sold by the drink. The all-beverages licensee is licensed for beer, wine, and distilled spirits. Public convenience and necessity pertains to the ability of the public to engage in the on-premises consumption of alcoholic beverages by the drink in a licensed public setting. The licensed activity for such licenses is the on-premises consumption of alcoholic beverages by the drink. As noted in Response No. 1, the statutory purpose of such licenses is to serve the public's convenience and necessity to engage in the licensed activity. As such, the law requires that licensees must make available to the public the types of alcoholic beverages for which they are licensed. The notion that a licensee can limit or not engage in the activity for which it is licensed by the state is entirely inconsistent with statutory provisions that require licensees to serve the public's convenience and necessity to engage in the licensed activity (on-premises consumption of alcoholic beverages), which limit licenses by a quota system; and which require that licenses not in use be lapsed and made available to other applicants. If the licensee does not wish to offer that which they are licensed to provide, the license must become available to someone who will make the products available to the public in a safe, responsible, and legal manner, as is intended by state law and rules. Licenses may not be used to restrict markets more than is permitted under the quota system. The department also appreciates the comments from the Licensees relative to rulemaking initiated by the department. The department is authorized by law, 16-1-303, MCA, to make rules implementing and supporting the MABC, and is unaware of any legal requirement that such rulemaking must be preceded by a court ruling or statutory change. With regard to Bell v. Dept. of Licensing, 182 Mont. 21, 594 P.2d 331 (1979), Mr. Peterson asserts that the department is here impermissibly adding a requirement not envisioned by the Legislature. However, the court, speaking more recently about the holding in Bell, has noted that agencies may make rules to accomplish a task necessary to apply articulated requirements of the Legislature. Bitterroot River Prot. Assn. v. Bitterroot Conservation Dist., 2002 MT 66, ¶¶12-14, 309 Mont. 207, 45 P.3d 24. The Legislature has clearly established that licenses are limited by a quota system, must serve the public's convenience and necessity to engage in the licensed activity (i.e., on-premises consumption of alcoholic beverages), and furthermore that such licenses not actually put to use must lapse and become available to another applicant. By requiring that licensees make available for sale by the drink the types of alcoholic beverages that are permitted by their license, the department is "apply[ing] the legislature's articulated requirement[s]." Bitterroot River Prot. Assn., ¶14. COMMENT NO. 7: Mr. Peterson stated with regard to New Rule IV (42.12.136), that as with New Rule II (42.12.134), if the goal is to make the rules clearly understandable and thoroughly complete, the department should add other types of directly related businesses, such as a hotel, a bowling alley, a restaurant, and a gambling casino rather than just requiring that a licensee operate as a bar or tavern. RESPONSE NO. 7: The department agrees with Mr. Peterson's comments on New Rule IV (42.12.136), which are similar to his comments on New Rule II (42.12.134). Although the other types of business are already identified in ARM 42.12.122, the department's goal is indeed to make the rules clearly understandable and thoroughly complete. Therefore, the department is amending New Rule IV (42.12.136) to remove the proposed language in (a) to avoid any potential confusion. By striking the language, beer licensees must operate a premises as defined in ARM 42.12.122(3)(a), which already includes other businesses directly related to the sale of alcoholic beverages, such as a bowling alley, hotel, or gambling casino, for all on-premises consumption licenses. COMMENT NO 8: Mr. Peterson commented that New Rule IV (42.12.136) requires a licensee to sell beer and/or wine by the drink, and for the same reasons as stated in his comments on New Rule II (42.12.134), this should be eliminated. He provided the example that a beer license owner may decide to add a wine amendment to sell wine, but subsequently discover that it was a poor business decision. That the department would require the licensee to sell wine until time of license renewal when the wine amendment could be removed makes no sense. Mr. Peterson further commented that in (1)(d), the department correctly describes that a beer licensee may sell alcoholic beverages for consumption off their premises, and offered that it may be helpful to make it clear that under the provisions of 16-3-303, MCA, beer can only be sold for off-premises consumption in its original package (e.g. no beer sold in cups or glasses to be consumed off-premises). The Licensees stated that they are opposed to any new rules or amendments to existing rules that are being made that are not supported by either new legislation or a court ruling which would mandate a change, and that they are opposed to New Rule IV (42.12.136). RESPONSE NO. 8: The department appreciates Mr. Peterson's comments on New Rule IV (42.12.136). Similar to the department's response to his comments on New Rule II (42.12.134), the licensee with a beer license and a wine amendment is licensed to sell beer and wine to the public. As previously stated, public convenience and necessity pertains to the ability of the public to engage in the on-premises consumption of alcoholic beverages by the drink in a licensed public setting. As such, the MABC requires that licensees have a responsibility to make available to the public the types of alcoholic beverages for which they are licensed. While the department does administer licensing on an annual basis at the end of each fiscal year, should a licensee obtain a wine amendment and then subsequently determine the amendment to have been a bad business decision, the licensee would have the option, at any time, to forfeit the wine amendment and request that the department issue a new license minus the wine amendment. The forfeiture, however, if made outside of the annual license renewal, would not result in a refund of any associated licensing fees already paid for that year. The department appreciates the comments from the Licensees relative to rulemaking initiated by the department. As stated in previous responses, the department is authorized by law, 16-1-303, MCA, to make rules implementing, and supporting, the MABC. COMMENT NO. 9: Mr. Peterson and Mr. Kenneally both commented, with regard to New Rule V (42.12.137), about the requirement in (1)(c) that the licensed off-premises area be physically separated from any business not directly related to the sale of beer and/or wine for off-premises consumption, by four permanent walls. Mr. Peterson stated that, in current law, only grocery stores and pharmacies are considered to be acceptable businesses for the off-premises sales of alcoholic beverages. The requirement for separation from businesses not directly connected to the sale of alcoholic beverages is found only in existing rules for on-premises licenses. He stated that to carry this requirement to off-premises licenses could cause significant problems for existing off-premises licensees and that the rule is unnecessary and should be eliminated. Mr. Peterson also asked, by way of example, if the department is now saying that Walmart needs to separate its grocery and pharmacy businesses from all its other businesses such as hardware, lawn and garden, and home furnishings. Mr. Kenneally commented that if it is the intent of the department to separate the sale of alcoholic beverages from other businesses not directly related to sales for off-premises alcoholic beverage consumption, it will have a significant and destructive impact on thousands of Montana businesses offering off-premises alcoholic beverage sales. He further commented that if the intent is only to clarify the requirements where on-premises and off-premises licensees operate in the same building, some clarification by the department of that intent is essential. The Licensees stated that they are opposed to any new rules or amendments to existing rules that are being made that are not supported by either new legislation or a court ruling which would mandate a change, and that they are opposed to New Rule V (42.12.137).
RESPONSE NO. 9: The department appreciates these comments, agrees with Mr. Peterson and Mr. Kenneally, and will amend the rule to add the clarity it is lacking. The intent of the rule is to clarify the requirements when a separate off-premises business, and an on-premises business or a separate business under separate ownership, are located within the same building. It is not a requirement on a business, such as a grocery store or a pharmacy, to wall off certain products. To help address the concerns and add clarity, the department is amending New Rule V (42.12.137) to make it clear that the limit applies only to separate businesses, which are under separate ownership, by permanent walls. The department appreciates the comments from the Licensees relative to rulemaking initiated by the department. As previously stated, the department is authorized by law, 16-1-303, MCA, to make rules implementing, and supporting, the MABC. COMMENT NO. 10: Mr. Herbert commented, with regard to New Rule VII (42.12.139), that (1)(d)(iii) speaks to limitations on self-service vending machines, self-service reach-in coolers, self-service open shelving, or self-service devices for brewers, while ARM 42.12.122(3)(f) provides that retail licensee premises may include self-service open shelving or reach-in coolers for off-premises sales only if the off-premises sales area is contiguous with the on-premises sales area, but is physically separated by walls. For consistency and clarity, he recommends that the provisions in 42.12.122(3)(f) should also be provided for manufacturers in New Rule VII (42.12.139), in place of the current prohibition for any such devices. Mr. Herbert further commented that this would provide manufacturers with the ability to have an area, separate from their sample room, where prepackaged products could be kept for access to the public for off-premises consumption. RESPONSE NO. 10: The department appreciates Mr. Herbert's comments and agrees with his concerns. For consistency and clarity, the department is amending the language in New Rule VII (42.12.139), to include similar language to allow manufacturers the ability to have an area, separate from their sample room, where prepackage products could be kept for access to the public for off-premises consumption. COMMENT NO. 11: Mr. Peterson commented, with regard to ARM 42.12.101, about the requirement in (6)(g) for proof that all filings and payments related to Montana income, corporation, withholding, business, and other taxes are current for the applicant in all cases, and in the case of a transfer the seller (current licensee). Mr. Peterson asked where this requirement stops and what is meant by the term "other taxes." Mr. Peterson and the Licensees further commented that, at the very least for a seller of a license, it should only pertain to the licensed activity. For a license applicant, it should be limited to income taxes. Both an applicant and a seller may have minority investments in businesses that they do not control but may have taxes not current, and this should not hold up an application for, or the sale of, a license. Mr. Peterson stated that the requirement for other taxes is overly broad, not specific enough, and should be eliminated. RESPONSE NO. 11: The department believes Mr. Peterson's and the Licensees' comments and concerns regarding tax filing and payments are not applicable. The department understands there are some unique circumstances and will work with the applicants and licensees, but unless the applicants and licensees are personally liable for the tax, the rule is not operative; and if they are personally liable for unpaid taxes, they are not fit (statutorily) to be a licensee. The law, 16-4-401, MCA, (and ARM 42.13.101) does require both current licensees, and applicants, to be in compliance with all applicable laws and regulations. This includes tax laws and rules. The term "other taxes" refers to taxes that are identified in Title 15, MCA.
COMMENT NO 12: Mr. Quintana, in reference to the inclusion of (6)(h) and (7)(h) in ARM 42.12.101, requiring "proof of assumed business name, if applicable" in the application for license, stated that the SOS does not object to this language, but pointed out that none of the implementation statutes cited require an applicant to have an assumed business name (ABN). Mr. Quintana further commented that part of the confusion may arise from the application forms implying that an ABN is mandatory, and asks that the department modify its current liquor licensing application forms to clarify that an ABN may be provided, if applicable. Mr. Quintana also commented, with regard to ARM 42.12.103, that although 16-4-401, MCA, was amended in 2007 to include general partnerships, limited partnerships, limited liability partnerships, and limited liability companies in addition to corporations, these added entities do not need to meet the same requirements for licensing as do corporations. In each case, a general partnership, a limited partnership, a limited liability partnership, or a limited liability company need only meet the requirements of an individual applicant as set forth in 16-4-401(2)(a), MCA. Corporate applicants can show they are authorized to do business in Montana by providing their articles of incorporation, a certificate of existence, or a certificate of fact. Other entities do not have this requirement. Mr. Quintana further commented that requiring entities other than corporations to provide articles of incorporation or organization or proof that they are authorized to do business in Montana is contrary to the requirements of 16-4-401, MCA, and should be clarified in the rule language. Mr. Quintana stated that the SOS also notes that some of the department's current liquor licensing application forms require limited partnerships, limited liability partnerships, and limited liability companies to provide their organization documents as filed with the SOS, which goes beyond the statutory licensing criteria as set forth in 16-4-401, MCA. Mr. Quintana commented, with regard to ARM 42.12.141, that requiring entities other than corporations to be authorized to do business in Montana prior to making application for an alcoholic beverages license and to provide a copy of a certificate of existence or certificate of fact is contrary to licensing requirements of 16-4-401, MCA. A general partnership, a limited partnership, a limited liability partnership, or a limited liability company need only meet the requirements of an individual applicant, which does not include being authorized to do business in Montana. Only corporate applicants are required to be authorized to do business in Montana. Extending these licensure requirements to business entities other than corporations exceeds the statutory authority of the liquor licensing statute. Mr. Quintana stated he hopes the SOS's comments will succeed in causing amendment of the department's proposed rules, and changes to existing liquor licensing application forms, as the issues addressed have caused problems for liquor license applicants and the SOS in the past. RESPONSE NO. 12: The department appreciates Mr. Quintana's comments and the opportunity to coordinate its rules and forms with the SOS's practices and procedures. The department will take Mr. Quintana's concerns regarding department forms into consideration and make clarifications to the relevant forms in order to avoid confusion. It is true that an ABN is not required for a business operating using the licensee's name. However, any licensee transacting business under anything other than the licensee's exact name must have properly registered its ABN prior to license approval. For purposes of applying for an ABN, the department understands the SOS to be in agreement that applying for an alcoholic beverages license constitutes transacting business under the ABN. With regard to Mr. Quintana's comment that only corporations are required by statute to provide documentation that they are authorized to do business in Montana, whereas other entities do not have this specific requirement, the department notes that the statutory provision, 16-4-401, MCA, which is applicable to all applicants regarding the applicant demonstrating they will operate the establishment in compliance with all applicable laws of the state, would include being properly registered to do business in Montana. After further discussions between the department and Mr. Quintana, the department believes that the SOS and the department are now in agreement as to the materials that must be included with applications. Mr. Quintana made several suggestions for revisions to ARM 42.12.103 and 42.12.141 to address his concerns. The department is largely in agreement with those suggestions and is making amendments to those rules accordingly. COMMENT NO 13: Mr. Peterson and the Licensees commented, with regard to ARM 42.12.106, that the department's proposed new definitions would be new requirements and there has been no change in statute or a court ruling that would give the department the authority to make the changes. Mr. Peterson further commented that he does not know what is meant by a "bar area," and if it means an actual bar, this is a new requirement in rule and he is adamantly opposed to the requirement that a premises must have an actual bar. As long as the premises are set up to maintain complete control at all times over alcoholic beverages, the requirement of a bar is unjustified and an unnecessary cost to the licensee. He also commented that he is opposed to the department's proposed definition of the term "individual serving" as a new and unnecessary requirement. He further commented that while it is their understanding that the definition of "individual serving" will only apply to off-premises sales at an on-premises location, New Rule II (42.12.134) and New Rule IV (42.12.136) require the sale of alcohol by the drink. A drink would constitute an individual serving thereby limiting the size for on-premises consumption whether envisioned or not. Mr. Peterson stated that if the department's intent is truly to only apply to off-premises sales, language would need to be changed to ensure that intent. Mr. Peterson also commented, with regard to the proposed definition of "patio/deck," that while having a patio/deck as part of a licensed premises is not a new concept, having a perimeter barrier is a new requirement and he is opposed to this change. He stated that defining the term "perimeter barrier" is a new concept with a new requirement for licensees and he opposes this change. The Licensees also commented they are opposed to the definition of a patio/deck in current statute and rules, because the requirement for a perimeter barrier is both unnecessary and an unwarranted cost to the licensee. Mr. Peterson commented about the department amending the definition of "restaurant" as it applies to an all-beverages license or a retail on-premises beer or beer and wine license (but not a restaurant beer and wine license), stating that he is not sure why the changes are being made, and that if the amendments change current practice in rules, he is opposed to the changes. RESPONSE NO. 13: The department thanks Mr. Peterson and the Licensees for their comments on the new definitions. There is not a requirement that there be a change in statute or a court ruling in place in order for the department to have the authority to promulgate new rules and/or definitions. The definition for "bar preparation area," means an actual bar, and this is not a new requirement. This has been included in existing rule ARM 42.12.122 (2)(b)(ii) for many years. The intent of an alcoholic beverage license is to promote the public's ability to engage in the licensed activity, which is the on-premises consumption of alcoholic beverages, and the premises must be designed to accommodate the licensed activity. The primacy of the alcoholic beverage sales aspect of the licensed business is further indicated by the law which makes an alcoholic beverages license a prerequisite for obtaining a license to engage in another activity commonly associated with bars, such as gambling. (See In re Transfer of Ownership & Location of Mont. All-Alcoholic Bevs. Lic. No. 02-401-1287-001, 2007 MT 192, ¶ 4, 338 Mont. 363, 168 P.3d 68). The public has the right to consume alcoholic beverages in a responsible and legal manner without having to engage in another activity. With regard to the definition of the term "individual serving" as a new and unnecessary requirement, adding the term helps the department achieve its goal to increase the public's and licensees' understanding of liquor licensing laws. The goal is to eliminate any potential confusion by applicants, licensees, and the public of the premises suitability requirements for each license type where alcoholic beverages may be served or sold for either on-premises consumption or off-premises consumption, and to reflect legislative changes. The department's intention is to achieve this goal by making the rules clearly understandable and thoroughly complete. The definition of "individual serving" does only apply to off-premises sales at an on-premises location. The department does not intend to limit the size of a serving for on-premises consumption beyond existing rules and statutes prohibiting over-service. The department is amending New Rule II (42.12.134) and New Rule IV (42.12.136) to ensure this is not misunderstood. Although a patio/deck is not a new concept as part of a licensed premises, it has not been a part of the on-premises licensing rules beyond being defined. The department has allowed patio/decks within certain requirements. The proposed definition of "patio/deck" is to add the term, outline the current requirements, and eliminate any potential confusion by applicants, licensees, and the public of the premises suitability requirements where alcoholic beverages may be served or sold for on-premises consumption. It is necessary for perimeter barriers around decks and patios to be in place to aid licensees, law enforcement, and the public in knowing where consumption of alcohol is lawful and where it is not and to ensure licensees can maintain control over the consumption of alcoholic beverages within their premises. Finally, the department proposed to amend the definition of "restaurant" as it applies to an all-beverages license or a retail on-premises beer or beer and wine license (but not a restaurant beer and wine license). This is because a restaurant beer and wine license establishment has different requirements. The proposed amendments do not change the definition content or practices for an all-beverages license or a retail on-premises beer or beer and wine license. COMMENT NO. 14: Mr. Peterson, Mr. Kenneally, Mr. Herbert, and the Licensees all commented on the proposed amendments to ARM 42.12.122, regarding suitability requirements and the requirement of a bar area. Mr. Kenneally commented that requiring a licensee to bring its licensed premises into compliance with suitability standards is a new, unwarranted requirement which will have far reaching negative consequences if enacted. He further commented that these premises, as constructed, financed, and approved by the department are, for many licensees, their major life investment and the proposed requirement that many premises be reconfigured upon sale or transfer will have negative economic consequences that far exceed any positive effect of clarifying current law. He also commented, with regard to the definitions and ARM 42.12.122, conditions, qualification, and determination of suitability of licensed premises, that if defining a "bar preparation area" is intended to require a licensed premises to have an actual "bar," it would be in addition to the existing "bar preparation area" language which already mandates sufficient seating to encourage a patron to remain on the premises and consume the alcoholic beverages sold by the drink. He stated that he is opposed to the new proposed amendment, as it will be financially burdensome with no countering revenue upside to Montana businesses. He further stated that if this is not the intent of the department, then clarification of the proposed amendment is requested. Mr. Peterson stated that several of the proposed amendments are pertinent changes impacting their members. He commented that in (3)(c), the department is proposing to change existing rules by requiring 12 seats at premises exclusive of seats at gaming machines, while existing rules count seats at gaming machines for the purposes of meeting the 12-seat requirement, and (3)(a) states a location will meet the requirement as a business established for the on-premises consumption of alcoholic beverage if the business is operated as a gambling casino. He further stated that it would seem logical that if a gambling casino meets the requirements of premises designated for the on-premises consumption of alcoholic beverages, then one would count seats at gaming machines for the 12-seat requirement. He further commented that while most licensees with an on-premises license have 12 seats in addition to seats at gaming machines, their main opposition to this change is founded on the belief that it does nothing to comply with the requirements of the MABC to promote temperance, create orderly markets, or aid in the collection of taxes and, therefore, is unnecessary. Mr. Peterson commented that the reason for the change seems to be the department's erroneous conclusion that a licensee may not favor a business activity over the on-premises consumption of alcoholic beverages as stated in the preamble to the MAR notice. He further commented that to the extent the proposed reordering and amendment of the rule is adding new requirements or modifying existing requirements, he is opposed to it, as there have been no statutory changes or court rulings that would allow the department to amend rules that have been in existence for many years. The Licensees commented that they are opposed to any requirement that licensed premises must have an actual bar, that this requirement is totally unnecessary, and that it does nothing to improve the control over the sale of alcoholic beverages. The only result is to increase costs for a licensee. RESPONSE NO. 14: The department appreciates these comments regarding the suitability requirements of a bar area. The revised suitability rules are only in effect upon an alteration or a change in ownership or location in order to mitigate any costs that some licensees may face in complying with this rule. As explained in Response No. 1, the department recognizes that on-premises consumption alcoholic beverage licenses may, of course, be used in conjunction with other lawful businesses, as noted by the commenters. However, if a business chooses to obtain an on-premises alcoholic beverage license, it must uphold its obligation to permit the public to responsibly engage in on-premises alcohol consumption. It cannot design or operate its premises in such a way that on-premises alcohol consumption is difficult for the public to engage in without also engaging in some other activity. To have seating available for customers only if they also engage in gambling, for instance, would thwart this purpose. The department is aware of no requirement that a change in rules can only follow a change in statute or a court ruling. The department's proposed rule changes are intended to remove confusion and more accurately reflect the department's understanding of the statutes it is tasked with enforcing. COMMENT NO. 15: Mr. Peterson, Mr. Kenneally, Mr. Herbert, and the Licensees all commented with regard to the proposed amendments to ARM 42.12.122, relative to suitability requirements and zoning. Mr. Peterson, Mr. Herbert, and the Licensees all commented that premises currently licensed (presumably manufacturers as well) that do not meet the suitability standards are required to meet standards, which include several items including zoning, upon a transfer of ownership. Mr. Peterson stated that adding a new provision to the existing grandfather clause, requiring a licensee to bring its premises into compliance with all suitability requirements upon transfer of ownership, could prove troublesome to all licensees and noted that existing rules require a licensee to meet suitability standards only in the event of an alteration to the premises. Mr. Herbert commented that if a zoning change has taken place but the existing business has been grandfathered in, the impact of the rule change is unclear, and stated that the rule should be clear that preexisting zoning approval for the existing business is adequate for the transfer of ownership, otherwise the rule could render the value of any such business worthless. Mr. Peterson commented that he has concern with extending the requirement to upon transfer of ownership pertaining to (2). Extending the requirement to upon transfer of the license could disqualify a location if a local government has enacted zoning restrictions after the license was originally issued. He further commented that he does not think it is the intent of the department to render a licensee's location worthless by making this change, and therefore opposes the addition of the language upon transfer of license in (5). Mr. Peterson stated he hopes the department will remove this language or make it clear that the requirement does not apply to zoning by local governments. The Licensees commented that they are opposed to the change in the grandfather clause which adds a requirement that a licensee meet suitability requirements upon transfer of a license, and stated the change could have the effect of devaluing a licensee's premise that was licensed prior to a zoning change by local government. They commented that the department needs to remove this language or make it clear that meeting suitability requirements upon transfer or ownership does not apply to local government zoning restrictions. RESPONSE NO. 15: The department appreciates these comments. The amended rule with regard to a change of ownership is not a new provision to the existing rules. A change of ownership of a licensee requires an application, with the exception of those ownership changes arising from changes within a licensee entity such as the death of a co-owner, divorce among co-owners, or other ownership changes among existing owners of the licensee entity. When applications are processed, the department requires that any application for a change of ownership also must meet all suitability requirements, including those in ARM 42.12.122. The department is further amending the rule to reflect the exceptions to the rule such as the death of a co-owner, divorce among co-owners, or other ownership changes among existing owners of the licensee entity. COMMENT NO. 16: Mr. Ellison commented, with regard to the proposed amendments to ARM 42.12.122, that any time changes are made that make it more difficult to use or purchase a liquor license, it is very hard on small operations. He further commented that they currently have 147 employees in Montana working hard to provide safe and prudent sales of alcohol under current rules, and commented that the new law providing for server training as being a positive move to improve safety for all of Montana, that was strongly supported by license holders. Mr. Ellison stated that the current rule changes are not needed and cause a potential financial burden on anyone buying or selling a license. He further stated that they are currently looking at a location and have made an offer to purchase, but if the new rules go into effect as currently written, they would have to cancel the purchase because all of the rules could not be satisfied. He commented that since the current license holder is planning on closing if the purchase cannot happen, the seven current employees may be the first to lose their jobs because of the proposed rules. Mr. Ellison asked the department to please reconsider the rule changes as they are an extreme burden on operators, do not provide any needed clarification for the department, or create a safer environment for sales of alcohol in Montana. RESPONSE NO. 16: The department appreciates Mr. Ellison's comments and understands his concerns. His comments are similar to those in Comment No. 15. The department's proposal to amend current rules and adopt new rules is to increase the public's and licensees' understanding of liquor licensing laws. The intention is not to add costs and restrictions on business operations. The goal is to eliminate any potential confusion by applicants, licensees, and the public of the premises suitability requirements for each license type where alcoholic beverages may be served or sold for either on-premises consumption or off-premises consumption, and to properly reflect legislative changes. The department's intention is to achieve this goal by making the rules clearly understandable and thoroughly complete. New rules or amendments to existing rules are never applicable retroactively. Any transaction that has an application submitted ahead of the effective date of newly adopted or amended rules would be subject only to rules already in effect at the time of the application. COMMENT NO. 17: Mr. Peterson commented, with regard to ARM 42.12.133, that he agrees with the changes being proposed by the department with regard to concession agreements. He further commented that the only change he does not think is necessary is the concessionaire having to post a sign outside their premises so the public can easily determine that alcoholic beverages are available. Given some concessionaire's current locations, compliance with this requirement may not be possible. For example, a restaurant located in a mall may not be able to place a sign on the outside of a mall. Requiring the concessionaire to post the concession agreement similar to the requirement for a licensee to post their license is all that is needed to inform the public. The Licensees also commented that they are opposed to the requirement that a concessionaire post a sign on the outside of a building so the public can easily determine that alcoholic beverages are available. This requirement is not necessary and in some instances may not be possible for a concessionaire to comply. RESPONSE NO. 17: The department appreciates Mr. Peterson's and the Licensees' comments. The proposed rules require the sign to be outside the premises, not necessarily outdoors. A licensed business' sign inside a shopping mall, visible from the common area in the mall outside of the licensee's premises, would meet this requirement. The department believes the signage is necessary to inform the public about where alcoholic beverages are being sold and who the responsibly party is. COMMENT NO. 18: Mr. Nooney provided a general comment that he is opposed to the new rules and amendments that seem to serve no purpose other than to put added costs and restrictions on business operations, that some of the proposed changes are silly, and he wonders where they came from. RESPONSE NO. 18: The department appreciates Mr. Nooney's comments. The intention is not to add costs or place new restrictions on business operations. The department is proposing to amend current rules and adopt new rules to increase the public's and licensees' understanding of current alcoholic beverage licensing laws. The goal is to implement and support the MABC in a way that eliminates any potential confusion by applicants, licensees, and the public, regarding the premises suitability requirements for each license type where alcoholic beverages may be served or sold, for either on-premises consumption or off-premises consumption. The department's intention is to achieve this goal by making its rules clearly understandable and thoroughly complete. COMMENT NO. 19: Mr. Coles reviewed the proposed new rules and amendments and offered suggestions relative to some of the authorization and implementing citations that were being used, or were potentially being omitted.
RESPONSE NO. 19: The department appreciates and considered the suggestions Mr. Coles provided, agreed with many of his recommendations, and is amending the relevant citations accordingly. 3. As a result of the comments received, and upon further review of the rules based on those comments, the department adopts New Rule I (42.12.107), New Rule II (42.12.134), New Rule III (42.12.135), New Rule IV (42.12.136), New Rule V (42.12.137), New Rule VI (42.12.138), New Rule VII (42.12.139), and New Rule VIII (42.2.315), and amends ARM 42.12.101, 42.12.103, 42.12.106, 42.12.122, 42.12.128, 42.12.130, 42.12.133, 42.12.141, 42.12.143, and 42.12.302 with the following changes, stricken matter interlined, new matter underlined:
NEW RULE I (42.12.107) EDUCATIONAL MATERIALS (1) The department maintains educational materials for each type of alcoholic beverage license along with the trade practices that are permitted by Montana law and rules. Montana law provides that transactions involving alcoholic beverages are illegal unless specifically permitted by law. (2) Licensees should seek guidance from the department concerning whether actions not listed in the department materials are allowed before engaging in such transactions. Unless the department provides written guidance citing explicit authority, the licensee should treat all transactions not in the educational materials as prohibited. (3) Failure of a licensee to follow the guidance in the educational materials will not constitute an additional violation of law or rule. IMP: 16-1-301, 16-1-302, 16-1-304, 16-3-101, 16-6-301, MCA
NEW RULE II (42.12.134) CONDITIONS AND QUALIFICATIONS SPECIFIC FOR AN ALL-BEVERAGES LICENSE (1) In addition to the provisions stated in ARM 42.12.122, which pertain to every type of alcoholic beverage license, with regard to an all-beverages license, a party applying for either a new license, transfer of ownership of an existing license, transfer of location of an existing license, or approval of an alteration to the premises: (a)
AUTH: 16-1-303, MCA IMP: 16-3-303, 16-3-310, 16-3-311, 16-4-201, 16-4-203, 16-4-402, 16-4-404, 16-4-405, MCA NEW RULE III (42.12.135) CONDITIONS AND QUALIFICATIONS SPECIFIC FOR A RESTAURANT BEER AND WINE LICENSE (1) remains as proposed. (2) The term restaurant, as defined in ARM 42.12.401, does not include a coffee or beverage shop, bakery, kiosk, or a fast-food restaurant that, excluding any carry-out business, serves a majority of its food and drink in disposable containers not reused in the same restaurant. The disposable containers provision of the preceding sentence does not apply to a restaurant beer and wine license in use at a particular location by the same licensee as of April 9, 2009. AUTH: 16-1-303, MCA IMP: 16-3-311, 16-4-402, 16-4-404, 16-4-405, 16-4-420, MCA NEW RULE IV (42.12.136) CONDITIONS AND QUALIFICATIONS SPECIFIC FOR A BEER LICENSE AND A BEER LICENSE WITH WINE AMENDMENT FOR ON-PREMISES CONSUMPTION (1) In addition to the provisions stated in ARM 42.12.122, which pertain to every type of alcoholic beverage license, with regard to beer licenses for on-premises consumption, a party applying for either a new license, transfer of ownership of an existing license, transfer of location of an existing license, or approval of an alteration to the premises: (a)
AUTH: 16-1-303, MCA IMP: 16-3-303, 16-3-310, 16-3-311, 16-4-105, 16-4-203, 16-4-402, 16-4-404, 16-4-405, MCA NEW RULE V (42.12.137) CONDITIONS AND QUALIFICATIONS SPECIFIC FOR AN OFF-PREMISES BEER LICENSE AND/OR WINE LICENSE (1) In addition to the provisions stated in ARM 42.12.122, which pertain to every type of alcoholic beverage license, with regard to a license for off-premises consumption, a party applying for either a new license, transfer of ownership of an existing license, transfer of location of an existing license, or approval of an alteration to a premises must: (a) operate at a premises recognized as a grocery store, or a pharmacy, as described in ARM 42.12.126; (b) sell beer and/or wine for off-premises consumption only in their original packages; and (c) be physically separated from any business (2) and (3) remain as proposed. AUTH: 16-1-303, MCA IMP: 16-4-115, 16-4-402, 16-4-405, MCA
NEW RULE VI (42.12.138) CONDITIONS AND QUALIFICATIONS SPECIFIC FOR A BEER WHOLESALER AND/OR TABLE WINE DISTRIBUTOR LICENSE AND SUBWAREHOUSES (1) remains as proposed.
AUTH: 16-1-303, MCA IMP: 16-4-103, 16-4-106, 16-4-108, 16-4-402, 16-4-415, MCA NEW RULE VII (42.12.139) CONDITIONS AND QUALIFICATIONS SPECIFIC FOR A MANUFACTURER OF BEER, WINE, OR DISTILLED SPIRITS LICENSE (1) In addition to the provisions stated in ARM 42.12.122, which pertain to every type of alcoholic beverage license, with regard to a license for the manufacture of beer, wine, or distilled spirits, a party applying for either a new license, transfer of ownership or location of an existing license, or approval of an alteration to a premises, upon approval of its license by the department: (a) must operate at a premises recognizable as a manufacturing facility of beer, wine, or distilled spirits; (b) must be physically separated from any other business, not directly related to a manufacturing facility located in the same building; (c) must not allow alcoholic beverages to be provided to the customer through automatic dispensing or vending machines or self-service devices, and the licensee or employees must have direct involvement in the service of alcohol for on- or off-premises consumption; and (d) when provided for in law, may serve sample products manufactured on the licensed premises in one sample room. The sample room (i) must be located on the licensed premises; (ii) must restrict access by unauthorized persons to the manufacturing areas; (iii) must have licensee's or employee's direct involvement in the service of alcohol for on- and off-premises consumption. No alcoholic beverages can be provided to the customer through self-service vending machines, self-service reach-in coolers, self-service open shelving, or self-service devices (except for off-premises consumption), as provided in (iv); and (iv) may allow the licensee to sell alcoholic beverages for off-premises consumption, and the premises may include self-service open shelving or reach-in coolers for off-premises sales, only if the off-premises sales area is contiguous with the on-premises sales area, but is physically separated with walls.
AUTH: 16-1-303, MCA IMP: 16-3-213, 16-3-214, 16-3-411, 16-4-102, 16-4-107, 16-4-311, 16-4-312, 16-4-402, MCA NEW RULE VIII (42.12.315) SACRAMENTAL WINE LICENSE (1) through (3) remain as proposed. (4) This type of license is (5) and (6) remain as proposed. IMP: 16-4-105, 16-4-313,
42.12.101 APPLICATION FOR LICENSE (1) remains as proposed. (2) Applications for licenses shall be in the names of all persons with an ownership interest or to have an ownership interest in the business to be operated under the license. An owner of 10 percent or more, or who will have an ownership interest of 10 percent or more in the license, in the business, or in the entity owning the license, must meet the requirements as described in 16-4-401, MCA. If no single owner's interest is 10 percent or more, then persons whose combined ownership totals, or will total, 51 percent must meet the requirements as described in 16-4-401, MCA. If a corporation is publicly traded, it needs to meet the requirements provided for publicly traded corporations in 16-4-401, MCA. The names of all such persons shall appear on the licenses. The disqualification of any one or more applicants to hold the license disqualifies all. (3) through (13) remain as proposed.
AUTH: 16-1-303, MCA IMP: 16-3-310, 16-4-105, 16-4-201, 16-4-204, 16-4-207, 16-4-210, 42.12.103 SUPPORTING DOCUMENTATION -- ENTITY APPLICANTS (1) An entity applicant other than one with fewer than ten owners or whose stock or membership units are listed on a national exchange shall list: (a) the names, dates of birth, social security or federal tax identification numbers, and resident addresses of all owners, shareholders, directors, officers, members, and partners, as applicable; and (b) the number of shares and/or membership units owned by each person, as well as the percentage of ownership held by each person
(2) An entity applicant whose stock is listed on a national exchange or an entity with more than 10 stockholders, members, or partners, as applicable, shall list: (a) the names, dates of birth, social security numbers, and residence addresses of all directors and officers, and all owners of 10 percent or more of the issued stock, membership units, or partnership interest, as applicable; and (b) the number of shares of stock, membership units, or percentage of partnership interest held by each owner of 10 percent or more of shares of stock, membership units, or partnership interest
(3) All entity applicants must provide one of the following to verify they have registered to transact business in the state of Montana: (a) a certificate of existence or certificate of fact, as applicable; or (b) articles of incorporation or organization, or application filed with the secretary of state, as applicable. (4) In addition, the entity applicant must supply the following documents as applicable: (a) stock certificates; (b) stock ledger or membership units register; (c) by laws; (d) organization minutes; and (e) any other documentation required to determine licensing qualifications. AUTH: 16-1-303, MCA IMP: 16-4-203, 16-4-205, 16-4-401, MCA 42.12.106 DEFINITIONS The following definitions apply to this subchapter: (1) through (19) remain as proposed. (20) "Perimeter barrier" means a barrier enclosing the perimeter of the patio/deck portion of a licensed premises, which defines the boundary of the licensed premises in a way that: (a) clearly marks for patrons, licensees, licensees' employees, investigators, local law enforcement, or other interested parties, where consumption of alcohol is allowed; (b) impedes access to the service areas by underage persons or others who may attempt to enter the premises without the licensee's knowledge; and (c) consists of a fence or wall at least three feet high, or an alternative barrier that accomplishes the same purposes and is approved by the department. A perimeter barrier may be with or without entrances from the parking lot, sidewalk, or other areas beyond the (21) through (30) remain as proposed. IMP: 16-1-106, 16-3-311, 16-4-105, 16-4-205, 16-4-207, 16-4-301, 16-4-401, 16-4-402, 16-4-404, 16-4-413, 16-4-420, 16-4-423, MCA 42.12.122 CONDITIONS, QUALIFICATIONS, AND DETERMINATION OF SUITABILITY OF LICENSED PREMISES (1) remains as proposed. (2) The premises may be considered suitable for the retail sale of alcoholic beverages, distribution of alcoholic beverages, or manufacture of alcoholic beverages only if: (a) it meets the standards of the Department of Public Health and Human Services; the Department of Labor and Industry, Building Codes Bureau; and the Montana Fire Marshal's Office in the Investigations Bureau of the Department of Justice; or their delegated representatives; (b) the investigator can easily determine the type of alcoholic beverages business that is being conducted on the premises due to indoor and outdoor advertising, signage, and/or the general layout and atmosphere of the premises to be licensed; (c) for retail establishments, alcoholic beverages are advertised and displayed as being available for purchase; (d) the premises are open for business on a regular basis so as not to be considered a license on nonuse status; (e) the layout of the premises allows for licensee- and/or employee-only control over the preparation, sale, service, and/or distribution of alcoholic beverages; (f) the investigator can verify to the department that the dimensions shown on the floor plan accurately represent the physical layout of the premises; (g) the applicant has demonstrated that adequate safeguards are in place to prevent the sale, delivery, or giving away of alcoholic beverages to underage and intoxicated persons; (h) for a new license, or a transfer of location, the premises are not located where local government zoning restrictions or ordinances prohibit the sale and/or consumption of alcohol; (i) the premises are not located off regular police beats and can be properly policed by local authorities; (j) the sale of alcoholic beverages does not occur through the use of a drive-up window; (k) the premises meet the additional rules specific to each license type; and (l) the provisions of (3) are met for on-premises licenses. (3) A license issued for on-premises consumption of alcoholic beverages: (a) must be operated at a premises clearly recognizable as a business established for the on-premises consumption of alcoholic beverages or other business directly related to the on-premises consumption of alcoholic beverages, such as a bowling alley, hotel, gambling casino, or restaurant (not including a coffee or beverage shop, bakery, or kiosk); (b) must be operated at premises that are physically separated by permanent walls from any business not directly related to the on-premises consumption of alcoholic beverages. This includes a separate off-premises alcoholic beverage business operated by the on-premises licensee. The walls must be floor-to-ceiling and shall not be moved without department approval of alterations to the premises pursuant to ARM 42.13.106. The premises can have inside access to each business conducted in the building through a doorway no larger than six feet wide with a door that can be closed and locked when not in use; (c) except for restaurant beer and wine licenses, must be used at premises that have a bar preparation area where alcohol can be purchased and consumed and sufficient seating to encourage patrons to remain on the premises and consume the alcoholic beverages sold by the drink. Sufficient seating must consist of not less than twelve seats at a bar, tables, booths, gaming areas, or any combination of the above. The twelve seats required are independent of any seats at gaming machines; (d) may be used at premises that include a patio/deck, if it has the required perimeter barrier and is in compliance with fire regulations, except that a license used at a golf course does not require a perimeter barrier around a patio/deck because alcohol may be consumed at any place within the boundaries of the golf course; (e) must be operated at premises where no alcoholic beverages can be provided to the customer from self-service devices, self-service vending machines, self-service reach-in coolers, or self-service open shelving (except for off-premises consumption (f) except for restaurant beer and wine licenses, allows the licensee to sell alcoholic beverages for off-premises consumption, and the premises may include self-service open shelving or reach-in coolers for off-premises sales only if the off-premises sales area is contiguous with the on-premises sales area, but is physically separated with walls. (4) remains as proposed. (5) Premises currently licensed that do not meet the suitability standards are required to meet the above standards upon seeking department approval of alterations of the existing licensed premises in accordance with 16-3-311, MCA, or upon a AUTH: 16-1-303, MCA IMP: 16-3-311, 16-4-402, 16-4-404, 16-4-405, 16-4-420, MCA
42.12.128 CATERING ENDORSEMENT (1) through (5) remain as proposed. IMP: 16-3-103, 16-4-111, 16-4-204, MCA 42.12.130 DETERMINATION OF LICENSE QUOTA AREAS (1) through (3) remain as proposed. AUTH: 16-1-303, MCA IMP: 16-4-105, 16-4-201,
42.12.133 CONCESSION AGREEMENTS (1) and (2) remain as proposed. (3) The requirements of (2) regarding signage must be met for all licenses operating under a concession agreement and must be complied with for any such license to be issued or renewed for the license year beginning July 1, (4) through (6) remain as proposed.
AUTH: 16-1-303, MCA IMP: 16-3-305, 16-3-311, 16-4-401, 16-4-402, MCA
42.12.141 LICENSED ENTITIES (1) No alcoholic beverages license shall be issued to an entity unless
(2) An entity's application must be accompanied by (a) articles of incorporation or organization, or a certificate of existence for corporations and limited liability companies; or (b) a certificate of fact or application as filed with the Secretary of State for all other types of entities.
(3) The applicant must be current on all filings and payments related to Montana income, corporation, withholding, business, and other taxes.
AUTH: 16-1-303, MCA IMP: 16-4-401, MCA
42.12.143 RESTRICTION ON INTEREST IN OTHER LICENSES (1) For purposes of this rule, any ownership interest in a business (a) another all-beverages license in Montana; (b) a Montana beer wholesaler license; (c) a Montana table wine distributor license; (d) an alcoholic beverage manufacturer; (e) an importer of alcoholic beverages; or (f) a state agency liquor store. (2) remains as proposed. (3) Any person holding an ownership interest in a beer wholesaler license issued pursuant to 16-4-401, MCA, or, with the exception of (a), any member of their immediate family, is not qualified to own an interest in or have any affiliation with: (a) another Montana beer wholesaler license; (b) an alcoholic beverage manufacturer; (c) an importer of alcoholic beverages; (d) a Montana retail alcoholic beverages license; or (e) a state agency liquor store. (4) Any person holding an ownership interest in a table wine distributor's license issued pursuant to 16-4-401, MCA, or, with the exception of (a), any member of their family, is not qualified to own an interest in or have any affiliation with: (a) another Montana table wine distributor's license; (b) an alcoholic beverage manufacturer; (c) an importer of alcoholic beverages; (d) a Montana retail alcoholic beverages license; or (e) a state agency liquor store. (5) Any person holding an ownership interest in a Montana alcoholic beverage manufacturer pursuant to 16-4-401, MCA, or any member of their immediate family, is not qualified to own an interest in or have any affiliation with: (a) a Montana retail alcoholic beverage license; (b) a Montana beer wholesaler license; (c) a Montana table wine distributor license; or (d) a state agency liquor store. (6) Any person holding an interest in an agency liquor store, or any member of the agent's immediate family, is not qualified to own an interest in or have any affiliation with: (a) a Montana retail alcoholic beverages license; (b) a Montana beer wholesaler license; (c) a Montana table wine distributer license; (d) an alcoholic beverage manufacturer; or (e) an importer of alcoholic beverages.
AUTH: 16-1-303, MCA
42.12.302 DEFINITIONS The following terms will be used in this subchapter: (1) through 12 remain as proposed. IMP: 16-1-201, 16-4-201, 16-4-202, 16-4-301, MCA 4. The department amends ARM 42.12.110, 42.12.111, 42.12.115, 42.12.126, 42.12.129, 42.12.132, 42.12.144, 42.12.401, and 42.13.101 as proposed. 5. An electronic copy of this notice is available on the department's web site at www.revenue.mt.gov. Select the "Legal Resources" link in the left hand column, and click on the "Rules" link within to view the options under the "Current Rulemaking Actions – Published Notices" heading. The department strives to make the electronic copy of this notice conform to the official version of the notice, as printed in the Montana Administrative Register, but advises all concerned persons that in the event of a discrepancy between the official printed text of the notice and the electronic version of the notice, only the official printed text will be considered. While the department also strives to keep its web site accessible at all times, in some instances it may be temporarily unavailable due to system maintenance or technical problems. /s/ Cleo Anderson /s/ Dan R. Bucks CLEO ANDERSON DAN R. BUCKS Rule Reviewer Director of Revenue Certified to Secretary of State September 10, 2012
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A directory of state agencies is available online at http://www.mt.gov/govt/agencylisting.asp.
For questions about the organization of the ARM or this web site, contact sosarm@mt.gov.
